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Major Indonesian banks do better than expected in H1
The banking industry is seeing signs of recovery as loan growth starts returning to pre-pandemic levels and borrowers exit restructuring schemes as they resume payments.
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Stock illustration of a bank (Shutterstock/Anton Violin)
D
omestic banks are poised to book stronger-than-expected performance this year as loan disbursements exceed their mid-year targets and existing borrowers are better positioned to complete delayed payments.
Loan disbursements at the country’s three largest banks, state-owned lenders Mandiri and BRI as well as private lender BCA, grew between 9 and 14 percent annually, easily beating the loan growth target of 8 percent and above they announced in January.
Overall bank loan issuance was up more than 10 percent year-on-year (yoy) in June, twice the growth rate in December, according to Bank Indonesia (BI) data. And on July 21, the central bank revised its loan projection for the year to between 10 and 11 percent, up from 6 to 8 percent previously.
Executives of the three major banks, meanwhile, have announced upward revisions to their respective targets.
“We agreed to make small changes to show optimism. Previously, [the target] was around 8 percent, but now we are inclined toward 10 percent,” BCA CEO Jahja Setiaatmadja told reporters on Wednesday.
Read also: Major banks perform well in 2021, COVID-19 policy key to 2022 growth
Jahja attributed the higher-than-expected growth to increased demand for loans as working capital and investment from businesses that had regained confidence. Higher input costs due to surging commodity prices also played a role in driving up credit demand, he said.
